LP briefs, July 2008

PennSERS commits to Guggenheim VC fund, five others

Pennsylvania State Employees’ Retirement System made commitments to six funds in June, including one venture fund, Guggenheim Technology Ventures I, which is managed by Guggenheim Venture Partners, an arm of Chicago-based financial services firm Guggenheim Partners.

PennSERS commited up to $10 million to the Guggenheim fund. No target was available for the fund, which is still being raised, according to Thomson Reuters (publisher of VCJ). The fund lists two managing directors: Michael Burns and Eric Rothfus.

Guggenheim’s website says that the venture fund focuses on “investments in formation-stage and re-start technology companies that develop and deploy products and solutions for the components and communications industries.”

PennSERS also made commitments to five other funds: up to €25 million to Avenue Europe Special Situations Fund, up to $30 million to Dover Street VII, up to $15 million to Vista Equity Partners Fund III, up to $25 million to Great Hill Equity Partners IV and up to $30 million to H.I.G. Bayside Debt & LBO Fund II.

Founded in 1923, PennSERS reports that it has assets of more than $34 billion and more than 215,000 members. —Lawrence Aragon

OPERS’ alternative asset chief leavesGreg Uebele has resigned as head of alternative asset investments for the Public Employees’ Retirement System of Ohio.

Uebele, who was hired in 2001 to lead OPERS’ first investments in private equity, left the state pension fund on May 9. A source at OPERS would not say where Uebele is headed next, and added that OPERS has no plans yet to replace him. Before he joined OPERS, Uebele was with the Houston Firefighters Relief & Retirement Fund.

As a senior investment officer for the $71.6 billion state pension fund, Uebele managed relationships with OPERS’ external advisers and managers, including advisers of OPERS’ private equity, real estate and global bond portfolios.

Through Dec. 31, OPERS’ holdings in private equity totaled $2.2 billion, or 3.2% of its total assets. More than 70% of that sum is committed to LBO funds, with the remainder earmarked for venture capital and special situations.

When Uebele joined OPERS in 2001, the limited partner had a 4% PE allocation target. OPERS raised the target to 5% last year and added a new 5% target allocation to a $13 billion health care fund also under OPERS’ management. —Jeremy Harrell

Greenhill mines Lehman for placement team

Boutique investment bank Greenhill & Co. has taken a bite out of Lehman Brothers by poaching its private equity fund placement team, including Chris Kirsten, who was Lehman’s global head of private fund marketing.

Kirsten’s defection to New York-based Greenhill comes as the firm plans to compete against the likes of Lazard and Park Hill Group, a division of The Blackstone Group that has been gaining market share. Joining Kirsten are two ex-Lehman Brothers Managing Directors, Patrick Dunleavy and Neil Banta, Principal (and former NFL quarterback) Dave Brown, and Vice President Meghan Kelly.

“We originally went out looking for someone to help us market our own funds,” said Greenhill co-CEO Scott Bok. “But what we found was that there were a lot of individuals looking to move, and eventually realized that a fund placement business was kind of a natural for a boutique firm like Greenhill.” —Dan Primack

SCM maps U.S. expansion

SCM Strategic Capital Management AG, a Zurich-based adviser to institutional investors and publisher of an annual study on partnership terms and conditions, may open an office in the United States following the launch of offices earlier this year in London and Hong Kong.

CEO Stefan Hepp says that he has watched with interest the dwindling number of U.S. advisory shops that emphasize non-discretionary services, a less lucrative enterprise, in general, than providing discretionary work. SCM Strategic Capital, which prides itself on non-discretionary work for its mainly European clientele, figures it may be able to fill the breach.

The firm hasn’t decided exactly how to go about its entrée in the United States. It could acquire an advisory shop or do a joint-venture with one, Hepp says. Were it to simply open a branch office in the United States, the firm would most likely do so in New York City.

As an investor, the 12-year-old shop is already an experienced hand in the United States, having channeled hundreds of millions of dollars in client money into funds managed by such firms as Advent International, The Blackstone Group and Hellman & Friedman.

Expect SCM Capital to commit about $1 billion this year to perhaps 15 funds, up from $800 million last year. Most of that sum will be divided about equally between U.S. and European funds, with perhaps $150 to $180 million going to Asia and other parts of the world, including South America. —David Toll

TRS Illinois launches new managers program

The Teachers Retirement System of Illinois recently created a new allocation that will steer as much as $100 million per year to emerging managers of venture capital, buyout and mezzanine funds.

The new allocation expands TRS Illinois’ emerging managers program, which previously directed $125 million annually to emerging firms specializing in public equity investing. Under the newly expanded program, TRS Illinois expects to commit $10 million to $25 million per fund, resulting in three to five new relationships per year across VC, buyouts and mezzanine, says Eva Goltermann, public information officer for the $41 billion state pension fund.

The Springfield, Ill.-based limited partner decided to expand the program beyond stocks because the investment team believed it was missing out on chances to get in on the ground floor with new alternative-asset management shops. The new allocation should allow TRS Illinois to back spin-outs from proven firms and pay extra attention to firms owned by minorities and women, Goltermann says.

“The whole point is we’re looking to find the next generation of top-tier managers,” she says. TRS Illinois typically commits $75 million to $100 million per LBO limited partnership, a commitment range that’s well in excess of what most emerging fund managers could absorb from a single backer.

TRS Illinois’ staff will supervise the selection of fund commitments. The pension fund will also receive some assistance from PCG Asset Management, its adviser for alternative assets. —Jeremy HarrellJPMorgan wins $150M LACERA mandate

The $42 billion Los Angeles County Employees’ Retirement Association has chosen JPMorgan Private Equity Group to oversee the selection of emerging private equity managers for its portfolio. JPMorgan beat out Hamilton Lane and Fairview Capital.

JPMorgan declined to comment.

LACERA plans to create a discretionary separate account to invest $150 million over three years, says spokesman Christopher Wagner. JPMorgan will identify VC and buyout emerging manager investment opportunities, committing no more than $50 million for LACERA to limited partnerships in each 12-month period.

The minimum size of each investment is $5 million, with a maximum size of $20 million. Buyout funds must be between $100 million and $750 million in size, and venture funds are limited to those between $100 million and $300 million. Vehicles must be the first, second or third funds for a general partnership. —Nancy Gordon

MassPRIM commits

The Massachusetts Pension Reserves Investment Management, a $52.7 billion state pension fund, recently made commitments to seven private equity funds.

MassPRIM, which is forecasting double-digit returns in private equity for this year, voted to put $675 million into the funds.

Four funds will each receive $100 million: Tanaska Power Fund II, Quantum Energy Partners V, TCW Crescent Mezzanine Partners V and Avenue Europe Special Situations fund.

Onex Partners III will receive $150 million, American Securities Fund V will receive $75 million and Thoma Bravo IX will receive $50 million. —Reuters